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Economy and Finance

The euro as legal tender

Information on the euro's status as legal tender in the euro area and its practical use as a national currency.

Official currency

The euro is the single currency shared by European Union countries that have adopted the euro. While Denmark does not participate through an 'opt out', other EU countries have not adopted the euro yet because the convergence criteria to join the euro are not met.

Official currencies, including the euro, consist in a monetary system designed and controlled by a state or, as regards the euro, by supranational structures.

Within the euro area, only the euro has the status of legal tender. Article 128 (1) TFEU lays down the legal tender status of euro banknotes, and article 11 of Regulation EC/974/98 does so with regard to euro coins. This means that in the absence of an agreement of the means of payment, the creditor is obliged to accept a payment made in euro which subsequently discharges the debtor from his payment obligation.

Yet, during transactions, contractual parties are free to use other official foreign currencies with legal tender status in the state of issuance (e.g. the pound sterling or the US dollar). The same applies to privately issued money like local exchange trading systems (e.g. voucher-based payment systems in certain communities) or virtual currency schemes (e.g. Bitcoin). Although these are not official currencies and have no legal tender status, parties can agree to use them as private money without prejudice to the official currency. In that way, these forms of private money can be considered as economic assets. Private money transactions and business are subject to the general rules of commodity trade such as taxation law, business law, anti-money laundering law or others. However, they are not official currencies and they are not governed by monetary law.

Practical questions about the euro

Although euro area countries share a single currency, interpretations of its legal tender status means still differ across countries. This may be a source of confusion and lead to questions such as

  • can a retailer refuse payments in cash at all times?
  • can shops refuse payments with high denomination banknotes?
  • can surcharges be imposed on payments in cash?

Therefore, the purpose of the Commission recommendation on the scope and effects of legal tender of euro cash (2010/191/EU) is to provide guidelines on such issues with direct implications on peoples' daily lives. These guidelines are based on 10 principles

  • banknotes and coins should be accepted for their full face value to pay for debts
  • payments in cash should be the accepted rule. This should only be refused because of the 'good faith' principle - for example, if the retailer does not have enough change
  • it should be the rule to accept high denomination banknotes
  • no surcharges should be imposed on payments in cash
  • countries should not adopt new rounding rules to the nearest 5 cent
  • countries should prevent euro collector coins from being used as means of payment
  • Stained banknotes should be brought back to the National Central Banks as they might be the product of a theft
  • total destruction of banknotes and coins by individuals in small quantities should not be prohibited
  • mutilation of banknotes and coins for artistic purposes should be tolerated
  • the competence to destroy fit euro coins should not belong to national authorities in isolation anymore

Factsheet on the recommendation